TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.

While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.

TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.

These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.

The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold."

Natural Resources Partners

Dividend Yield: 10.60%

Natural Resources Partners

(NYSE:

NRP

) shares currently have a dividend yield of 10.60%.

Natural Resource Partners L.P., through its subsidiaries, owns, manages, and leases mineral properties in the United States.

The average volume for Natural Resources Partners has been 473,200 shares per day over the past 30 days. Natural Resources Partners has a market cap of $207.9 million and is part of the metals & mining industry. Shares are down 81.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Natural Resources Partners

as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • NRP's very impressive revenue growth greatly exceeded the industry average of 37.2%. Since the same quarter one year prior, revenues leaped by 55.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for NATURAL RESOURCE PARTNERS LP is rather high; currently it is at 64.07%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, NRP's net profit margin of 24.86% significantly outperformed against the industry.
  • NATURAL RESOURCE PARTNERS LP's earnings per share declined by 10.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, NATURAL RESOURCE PARTNERS LP reported lower earnings of $0.96 versus $1.54 in the prior year. For the next year, the market is expecting a contraction of 34.9% in earnings ($0.63 versus $0.96).
  • The debt-to-equity ratio is very high at 2.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.41, which clearly demonstrates the inability to cover short-term cash needs.

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Medley Capital

Dividend Yield: 15.40%

Medley Capital

(NYSE:

MCC

) shares currently have a dividend yield of 15.40%.

Medley Capital Corporation is a business development company. The fund seeks to invest in privately negotiated debt and equity securities of small and middle market companies. The company has a P/E ratio of 7.08.

The average volume for Medley Capital has been 357,100 shares per day over the past 30 days. Medley Capital has a market cap of $449.8 million and is part of the financial services industry. Shares are down 17% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

Medley Capital

as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 129.46% to $19.06 million when compared to the same quarter last year. Despite an increase in cash flow of 129.46%, MEDLEY CAPITAL CORP is still growing at a significantly lower rate than the industry average of 230.25%.
  • The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 65.07%. Regardless of MCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCC's net profit margin of 23.28% compares favorably to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, MEDLEY CAPITAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 57.57% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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New Mountain Finance

Dividend Yield: 9.70%

New Mountain Finance

(NYSE:

NMFC

) shares currently have a dividend yield of 9.70%.

New Mountain Finance Corporation is a Business Development Company specializing in investments in middle market companies and debt securities at various levels of the capital structure, including first and second lien debt, unsecured notes, bonds, and mezzanine securities. The company has a P/E ratio of 9.77.

The average volume for New Mountain Finance has been 306,500 shares per day over the past 30 days. New Mountain Finance has a market cap of $900.6 million and is part of the financial services industry. Shares are down 5.6% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates

New Mountain Finance

as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.3%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 68.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 53.45% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 200.05% to $118.01 million when compared to the same quarter last year. Despite an increase in cash flow, NEW MOUNTAIN FINANCE CORP's cash flow growth rate is still lower than the industry average growth rate of 230.25%.
  • In its most recent trading session, NMFC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Capital Markets industry and the overall market, NEW MOUNTAIN FINANCE CORP's return on equity is below that of both the industry average and the S&P 500.

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